First Quarter 2018 Trading Update - WPP · 2021. 2. 11. · arising from the annual audit by management and the Company’s independent auditors. For further information on factors

First Quarter 2018 Trading UpdateLondon30 APRIL 2018

WPP plc 1

Safe Harbour Statement

WPP plc 2

FIRST QUARTER 2018 TRADING UPDATE

The following cautionary statement is included for safe harbour purposes in connection with the Private Securities Litigation Reform Act of 1995 introduced in the United States of America. This presentation may contain forward-looking statements within the meaning of the US federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially including adjustments arising from the annual audit by management and the Company’s independent auditors. For further information on factors which could impact the Company and the statements contained herein, please refer to public filings by the Company with the Securities and Exchange Commission. The statements in this presentation should be considered in light of these risks and uncertainties.

Highlights

WPP plc 3


1 The Group has changed the description of ‘net sales’ to ‘revenue less pass-through costs’ based on the adoption of new accounting standards and recently issued regulatory guidance and observations. There has been no change in the way that this measure is calculated

Reported revenue down 4.0% at £3.555 billion, currency headwinds of 6.0%, constant currency up 2.0%.

Reported revenue less pass-through costs¹ down 5.1% at £2.948 billion, currency headwinds of 6.1%, constant currency up 1.0%.

Like-for-like revenue up 0.8% and revenue less pass-through costs down 0.1%:– United Kingdom, Asia Pacific and Latin America up strongly, offset by declines in North America and

Western Continental Europe.– Media investment management, public relations & public affairs and specialist communications (including

direct, digital & interactive) performed well, advertising and data investment management more difficult.– Constant currency net debt of £5.20bn at 31 March 2018 up £354 million on same date 2017, average net

debt of £4.77bn for first quarter of 2018 up £357 million over same period 2017.

Net new business $1.737 billion won in first quarter.

Implementation of IFRS 15 From 1 January 2018

REVENUE REVENUE LESS PASS-THROUGH COSTS

£M Q1 2018 Q1 2017 Q1 2018 Q1 2017

Pre IFRS 15 n/a 3,597 n/a 3,100

Impact of IFRS 15 n/a 107 n/a 7

Post IFRS 15 3,555 3,704 2,948 3,107

WPP plc 4

Implementation of IFRS 15 Revenue from Contracts with Customers: Implemented from 1 January 2018. 2017 results restated resulting in an increase in revenue of £107m and revenue less pass-through costs of £7m. Certain third-party costs are now included in revenue where the Group acts as principal with respect to services

provided to clients under IFRS 15.


Summary – Revenue and Revenue Less Pass-Through Costs Growth

WPP plc 5

% GROWTH REVENUEREVENUE LESS

PASS-THROUGH COSTS

Like-for-like 0.8 -0.1

Acquisitions 1.2 1.1

Constant currency 2.0 1.0

Foreign exchange -6.0 -6.1

Reportable sterling -4.0 -5.1


Impact of Foreign Exchange

-8%

-6%

-4%

-2%

0%

2%

4%

6%2017 FY ACT 2018 Q1 ACT 2018 Q2 EST 2018 Q3 EST 2018 Q4 EST 2018 FY EST

Revenue Revenue less pass-through costs

WPP plc 6

Q1 headwind -6% revenueand revenue less pass-through costs. Full year headwind -5%

revenue and revenue lesspass-through costs. Q2-Q4 run at £/US$ 1.40

and £/€ 1.14.


Revenue Less Pass-Through Costs by Region

WPP plc 7


REVENUE LESS PASS-THROUGH COSTS

% CHANGE

% GROUP 2018 £M 2017¹ £M REPORTEDCONSTANTCURRENCY LIKE-FOR-LIKE

North America 35.9 1,055 1,203 -12.3 -1.7 -2.4

UK 13.7 405 396 2.1 2.1 1.6

Western Continental Europe 21.2 626 600 4.4 2.7 -0.2

Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe

29.2 862 908 -5.0 2.7 2.3

Total 100.0 2,948 3,107 -5.1 1.0 -0.1

1 2017 restated for the implementation of IFRS 15

Revenue Less Pass-Through Costs Growth¹ by Region

WPP plc 8

Q1 18 FY 17

Mature Markets -1.0% -0.9%

“Faster Growing” Markets 2.3% -0.8%

Total -0.1% -0.9%

-2.4%North America

1.6%UK

-0.2%Western Continental Europe

0.7%Asia Pacific

5.6%Central & Eastern Europe

-3.1%Africa & Middle East

9.1%LATAM


1 Like-for-like growth vs. prior year

Top 6 Markets

WPP plc 9

REVENUE LESS PASS-THROUGH COSTS GROWTH¹

2018 Q1 -2.2% 1.6% -5.7% 2.1% n/a³ 0.7%

2017 FY -3.2% 4.8% -1.3% -3.2% -0.9% 0.4%

USA UK Greater China²Germany ANZ France


1 Like-for-like growth vs. prior year2 Includes Hong Kong and Taiwan3 WPP AUNZ listed company

BRICs Markets

WPP plc 10

Greater China² IndiaBrazil Russia


REVENUE LESS PASS-THROUGH COSTS GROWTH¹

2018 Q1 3.6% 2.1% 6.0% 0.3% 0.6%

2017 FY -1.8% -3.2% 1.6% 1.1% -15.4%

1 Like-for-like growth vs. prior year2 Includes Hong Kong and Taiwan

Mainland China

Revenue Less Pass-Through Costs by Sector

WPP plc 11


1 2017 restated for the implementation of IFRS 152 Digital revenue less pass-through costs like-for-like growth 3.0%

REVENUE LESS PASS-THROUGH COSTS

% CHANGE

% GROUP 2018 £M 2017¹ £M REPORTEDCONSTANTCURRENCY LIKE-FOR-LIKE²

Advertising, Media Investment Management 42.7 1,257 1,373 -8.4 -2.8 -0.9

Data Investment Management 15.4 455 484 -6.0 -1.1 -1.7

Public Relations & Public Affairs 8.9 263 282 -7.1 0.0 1.1

Brand Consulting, Health & Wellness and Specialist Communications

33.0 973 968 0.6 7.8 1.5

Total 100.0 2,948 3,107 -5.1 1.0 -0.1

WPP plc 12


WPP AGENCY INCUMBENT ACCOUNT OFFICE BILLINGS $M

MediaCom IND Hotels.com N America 175

MediaCom DEN Sky Europe 169

Wavemaker DEN Danone N America 118

Wavemaker/Y&R IND Altice USA 110

Team Amplify IPG Bose Global 80

MediaCom/Y&R OMC Office Depot NAFTA 62

Wavemaker OMC Adobe Global 55

Trade Estimates of Major New Business Wins

Underlined are wins since 1 April

WPP plc 13


Trade Estimates of Major New Business Losses

WPP AGENCY WINNING AGENCY ACCOUNT OFFICE BILLINGS $M

Wavemaker PUB Campbell Soup Co. USA, ANZ, Indonesia 189

Wavemaker PUB Marriott Global 140

JWT IPG Edgewell Global 50

Underlined are losses since 1 April

Uses of Free Cash Flow

WPP plc 141 Acquisitions are initial payments, net of cash acquired and disposal proceeds, and include other investments and associates2 FY 2017 average net debt stated at 2017 actual exchange rates

CATEGORY FY TARGET MARCH YTD 2018 MARCH YTD 2017 FY 2017

Acquisitions (excluding earnouts)¹:

Gross £300-£400m £80m £129m £326m

Less proceeds - £(44m) £(3m) £(296m)

Net acquisitions - £36m £126m £30m

Share buy-backs:% of issued share capital

-2%-3%

£145m0.9%

£180m0.8%

£504m2.5%

Headroom: Undrawn facilities & surplus cash - £2.62bn £3.10bn £3.23bn

Average net debt at 2018 exchange rates - £4.77bn £4.41bn £5.14bn²


Revised target range of average net debt/EBITDA ratio lowered to 1.5-1.75x, to achieve over next 12–18 months.

Outlook

WPP plc 15


Financial guidance remains unchanged for 2018.

Our quarter one preliminary revised forecasts are in line with budget, with a slightlystronger second half, at revenue less pass-through costs level and show:

– Flat like-for-like revenue and revenue less pass-through costs.– Revenue less pass-through costs operating margin flat on constant currency basis.

Last Two Weeks

Established and communicated clear roles:– Mark: clients, companies and people.– Andrew: commercial management, portfolio optimisation.

Spoken to our key clients – very reassured by their response, but not complacent:– Personally to CEO/CMO of our top 20 clients (23% revenues).– 52 WPP global client team leads to their clients (33% of revenues).– Operating company leads spoken to clients across the Group.

Communicated with our people:– Meetings and calls with 25 operating company leaders.– Group-wide communications.

Executive Chairman has visited or called all our top 20 shareholders (35% of our shareholder base).

WPP plc 16


WPP has Tremendous Talent, Resources and Capabilities

Strong company and client team leaders; primary holders of relationships with clients.

Powerhouse of talent; most creative group at Cannes for last seven years; people with unparalleled knowledge and expertise around the world.

Number one media buying and planning business globally.

Leading research, data and insight businesses.

Strong public relations, health & wellness and brand consulting agencies.

Very strong market positions in Asia Pacific, Latin America, Africa & Middle East.

Leading digital brands such as AKQA, Essence, Mirum, POSSIBLE, VML and Wunderman.

Strong mutual relationships with technology companies.

WPP plc 17


How We See the World

Continued growth in demand from clients for marketing and communication services, as clients need to:– Drive their top-line growth.– Build and manage direct customer relationships.– Transform their customer experiences.– Sell in a multi-channel environment.

However, we need to recognise the challenges facing our industry:1. Structural rather than cyclical shifts in the market as clients react to the new environment.2. WPP and consulting companies starting to compete in the faster-growing segments.3. Amazon, Facebook, Google et al. competing for talent, client attention and seeking more direct

relationships.

WPP plc 18


Path to Growth for WPP

Focus on our clients – provide faster, more agile, more effectively integrated solutions.

Look at our offering and focus our investments in the faster-growing parts of our business.

Continue to simplify our organisation to make it:– easier for clients to access our talent, creativity and capabilities.– easier for us to manage.

Embed data and technology much more deeply into our offer and the way we work –while retaining our creative edge.

Invest in talent that represents our changing world.

WPP plc 19


Financial Management, Operations and Portfolio

Align how we run the business commercially to support our growth strategy.

Address under-performing parts of the Group more proactively to focus on growth and free up resources for investment.

Accelerate strategies that support growth and drive efficiencies:– Co-locations, shared services, global platforms.

Evaluate the shape of the overall portfolio with an open mind:– Focus on growth and maximising shareholder value.– Release capital from our portfolio of minorities and associates.

WPP plc 20


Other Financial Information

WPP plc 21

HARD COPY ONLY

Revenue Less Pass-Through Costs Growth by Country

WPP plc 22

1 Like-for-like growth2 Australia not disclosed as WPP AUNZ a listed company3 Includes Hong Kong and Taiwan

REVENUE LESS PASS-THROUGH COSTS GROWTH¹ TOP COUNTRIES²

More than 10% Argentina, Mexico, Poland

5% to 10% Brazil, Japan, Norway, South Korea, Sweden

0% to 5%Greater China³, Mainland China, Denmark, France, Netherlands, India, Italy, Russia, Spain, South Africa, Thailand, Turkey, UK

Less than 0% Belgium, Canada, Dubai, Germany, Indonesia, Philippines, Singapore, Switzerland, USA


Revenue Less Pass-Through Costs Growth by Category

WPP plc 23


REVENUE LESS PASS-THROUGH COSTS GROWTH¹ CATEGORIES

More than 10% Retail

More than 5% Automotive, Electronics

0% to 5% Oil, Travel & Airline

Less than 0%Computers, Drinks, Financial Services, Food, Government, Media & Entertainment, Personal Care & Drugs, Telecommunications

1 Like-for-like growth

Effects of Currency

WPP plc 24


Q1 2018 Q1 2017STERLING

STRONGER/(WEAKER)

US$ 1.39 1.24 12%

€ 1.13 1.16 -3%

¥ 151 141 7%

Chinese Renminbi 8.9 8.5 5%

Brazilian Real 4.52 3.89 16%

Australian $ 1.77 1.63 9%

Canadian $ 1.76 1.64 7%

Indian Rupee 90 83 8%

Singapore $ 1.84 1.75 5%

Russian Rouble 79 73 8%

South African Rand 16.6 16.4 1%

Currency movements accounted for 6.0% decrease reported revenue and 6.1% decrease revenue less pass-through costs.

Reflects strengthening of £ sterling against most currencies.

Debt Maturity Profile £m at 31 Mar 2018

WPP plc 25

Weighted Average Coupon 3.0%Weighted Average Maturity 9.2 yearsAvailable Liquidity £2,622m

£ TOTALCREDIT

£ TOTALDRAWN

£ bonds £400m (2.875% Sep ’46) 400 400US bond $500m (5.625% Nov ’43) 356 356US bond $300m (5.125% Sep ’42) 214 214Eurobonds €600m (1.625% Mar ’30) 527 527Eurobonds €750m (2.25% Sep '26) 659 659Eurobond €500m (1.375% Mar ‘25)/£444m Swap1 444 444US bond $750m (3.75% Sep '24) 534 534Eurobonds €750m (3.0% Nov ’23) 659 659US bond $500m (3.625% Sep ’22)2 356 356Eurobond €250m (3m EURIBOR + 0.45% Mar ’22) 220 220US bond $812m (4.75% Nov ’21)3 579 579£ bonds £200m (6.375% Nov ’20) 200 200Eurobonds €250m (3m EURIBOR + 0.32% May ’20) 220 220Eurobonds €600m (0.75% Nov ’19) 527 527Debt Facilities 5,895 5,895Bank revolver4 WPP ($2,500m Jul’21) 1,781 1,024Bank revolver4 WPP AUNZ (A$520m Mar’19) 284 218Net cash, overdrafts & other adjustments – (1,939)Total Borrowing Capacity / Net Debt 7,960 5,198

0

100

200

300

400

500

600

700

Exchange Rates £/$ 1.4034 £/€ 1.1386 £/A$ 1.82611 Swapped to £444m at 2.61%2 Swapped to 6 month $Libor + 1.52%

3 Swapped to 6 month $Libor + 2.34%4 These instruments are subject to financial covenants


Acquisitions Since 1 January

BAR – Portugal (Ogilvy)BAR is a leading independent creative agency in Portugal. BAR will merge operations with Ogilvy & Mather Portugal, with the combined business trading as BAR Ogilvy. It will be managed by the founders of BAR: Jose Bomtempo, Diogo Anahory and Miguel Ralha. Founded in Lisbon in 2009, BAR is an integrated agency with a strong creative reputation. Clients include Sagres, Millennium BCP, CUF, Nowo, TAP and Nespresso.

The Glitch – India (GroupM) The Glitch is a digitally-led creative agency. The Glitch was founded in 2009 and employs around 200 people in Mumbai and Delhi. The Glitch’s full-service capabilities include digital, video and content strategy, interactive design technology, e-commerce, branding and media planning. Clients include Unilever, Netflix, OYO Rooms, Shutterstock, Tinder and others in the entertainment, beauty and FMCG sectors.

Mash Strategy – UK (Kantar Consulting)Mash is a London-based brand strategy and growth consultancy. Mash provides integrated consulting services covering growth strategy, insight, innovation and brand transformation. Clients include Johnson & Johnson, Samsung, Unilever and PepsiCo. Mash was founded in 2010 and employs around 25 people in London and New York.

WPP plc 26


First Quarter 2018 Trading UpdateLondon30 APRIL 2018

WPP plc 27

Documents

First Quarter 2018 Trading Update - WPP · 2021. 2. 11. · arising from the annual audit by management and the Company’s independent auditors. For further information on factors